Recits

1. In one sentence, what is Financial Control?

Financial controls refer to the development of policies and procedures by an organization
to manage its financial resources and operate efficiently.
2. An organization needs to implement a financial control framework to manage, document, analzye,
and ___________.
Report transactions
3. Is the firm’s inability not be able to pay off the debt it has taken from the bank or the financial
institution.
Financial Risk
4. This strategy involves reviewing the company’s actual performance concerning its business plans
and adjusting policies and procedures in response to any anomalies, irregularities, or
unanticipated changes.

Planning and Organizing

5. Give three types of Financial Statements.

Balance Sheet

Statment of Cashflow

Income Statement

Statement of Changes in Equity

6. T or F, the controller’s responsibility is to raise adequate funds and maintain control of such funds
for the company.

False

7. Give at least one objective of Financial Control.

 Boost productivity and profitability by streamlining processes across all areas and departments of
the business.
 Conduct frequent audits and report accurate financial data to guarantee the balance sheet, cash
flow statement, and income statement are all free of errors.
 Direct, allocate, manage, and employ financial resources per needs, resulting in increased
performance and income.
 Improve operational efficiency by evaluating financial data, distributing resources more efficiently,
and controlling cash flow.
 Maintain financial accountability and communication at all levels, ensuring all stakeholders
comply with fiduciary responsibility, corporate governance, and due diligence obligations.
 Meet production targets, cut costs, and prevent invoice fraud through on-budget, on-target
expenditure.
8. Choose one type of Financial Control, then try to explain it in your own words.
9. This proves to be a prerequisite for analyzing the business’s strength, profitability,& scope for
betterment. Cash Flow
10. There are 3 kinds of financial control, among these three which What kind of financial control
focuses on a specific area of a business, like management or production? Selective Financial
Control
11. These are daily activities carried out by employees in an organizational setting to generate goods
and services for accomplishing the objectives of the business, such as profit generation.
Business operations
 12. This usually takes place after operations have occurred and identifies flaws in current policies
and regulations. Postdate Financial Control
13. This refers to the ability of a company to generate its revenue and maximize its profit.
Profitability
14. 13. This is based on the accounting equation that states that the sum of the total liabilities and
the owner's capital equals the total assets of the company. Balance sheet
15. To achieve their objectives, businesses often need to monitor and manage their financial
resources. What are the top three methods for doing so? Balance sheet, Cash flow statement,
and Income statement

Financial Controls

1. What is Financial Control?

 Financial controls refer to the development of policies and procedures by an organization
to manage its financial resources and operate efficiently. It is essential for cash flow
management, budgeting, and the prevention of any fraud or theft. Thus, it enables the
business to track and oversee its financial activities to grow and prosper.

2. Why do we need to practice Financial Control?

 An organization needs to implement a financial controls framework to manage,
document, analyze, and report transactions. Effective financial management planning
aids the company in mitigating financial risks, complying with fiduciary duties, corporate
governance, and due diligence requirements, and achieving financial goals. Its absence
can have an impact on budgeting, operations, and performance.

3. How does Planning, Organizing, Directing, and Controlling factor in practicing Financial Controls?

 Planning and Organizing

 Financial controls enable an organization to determine the direction, allocation, and use
of its financial resources. Thus, the company can make sensible spending decisions by
maintaining financial accountability based on its objectives consistent with its existing
situation and forecast. This strategy involves reviewing the company’s actual
performance concerning its business plans and

adjusting policies and procedures in response to any anomalies, irregularities, or

unanticipated changes. In simpler words, financial controls are necessary for the
formulation of strategies and policies of an organization. It not only reduces expenses but
 can also streamline the entire process, resulting in increased profits. The absence of it
can bring chaos to the system.

Businesses typically need to keep track of and control their financial resources to fulfill
their goals. The balance sheet, cash flow statement, and income statement (profit and
loss) are the three most effective ways to accomplish so. It provides an insight into
identifying new business prospects and fine-tuning processes to optimize performance
while adhering to industry and legal standards.

 Directing and Controlling (divided into 6 steps):

 The first step is to assess the company’s current performance in terms of sales,
profitability and cash available.
 The next step is to detect anomalies in budgets, financial reports, and balance sheets
that could prevent the company from achieving its goals.
 Further, it requires correcting discrepancies and deviations in financial accounts to bring
the business operations back on track.
 Then comes regularly updating all of the information, including resource management
policies and procedures, in financial documents.
 The next stage necessitates a thorough examination of the organization’s operational
policies, such as profitability, expenses, and production volume.
 The next phase is to improve operating standards and decision-making processes by
ensuring sales, profits, surpluses objectives are met.
 Finally, it requires making forecasts and setting goals for different scenarios based on the
above steps, including investment and production planning.

4. What are the objectives of Financial Controls?

A company must prepare a financial controls checklist to minimize the risks, avoid future consequences,
and ensure profitability. Its main objectives are:

 Boost productivity and profitability by streamlining processes across all areas and departments of
the business.
 Conduct frequent audits and report accurate financial data to guarantee the balance sheet, cash
flow statement, and income statement are all free of errors.
 Direct, allocate, manage, and employ financial resources per needs, resulting in increased
performance and income.
 Improve operational efficiency by evaluating financial data, distributing resources more efficiently,
and controlling cash flow.
 Maintain financial accountability and communication at all levels, ensuring all stakeholders
comply with fiduciary responsibility, corporate governance, and due diligence obligations.
 Meet production targets, cut costs, and prevent invoice fraud through on-budget, on-target
expenditure.

5. What is the importance of Financial Controls?

Financial controls are an essential component of long-term business strategy as these enable the organization to:

 To comply with fiduciary duties, corporate governance, and due diligence requirements
 To examine budgets, balance sheets, and financial statements for irregularities
 To improve the process efficiency and profitability
 To manage financial resources and activities
 To meet financial objectives
 To mitigate financial risks and prevent fraud or theft
 To monitor and control total cash inflow and outflow

6. Are there different types of Financial Controls?

There are mainly three types of finance controls based on their purpose and target areas:

 Immediate (Directional) Financial Control

 It involves taking quick actions in response to discrepancies in financial reports, which if
ignored can result in significant losses or undermine a company’s goals and operations.
 Selective Financial Control
 It concentrates on particular aspects of a company, such as management and
production. It evaluates how a process operates, how it adheres to guidelines, and
whether it contains flaws or margins of error. Then it employs all available metrics or
makes amendments to improve performance by maximizing resource utilization.
 Postdate Financial Control
 It usually takes place after operations have occurred and identifies flaws in current
policies and regulations. A corporation evaluates its existing strategy and performance
compared to its anticipated objectives and then makes necessary changes or
improvements based on the existing outcomes.

Key words:

Financial risk
 is the firm’s inability not to be able to pay off the debt it has taken from the bank or the financial
institution.

Budgeting
 is a method used by businesses to make precise projections of revenues and expenditure for a
future specific period of time while taking into account various internal and external factors
prevailing at that time.

Balance sheet
 is one of the financial statements of a company that presents the shareholders' equity, liabilities,
and assets of the company at a specific point in time. It is based on the accounting equation that
states that the sum of the total liabilities and the owner's capital equals the total assets of the
company.

Statement of Cash Flow

  is an accounting document that tracks the incoming and outgoing cash and cash equivalents from
a business.

The income statement

 is one of the company's financial reports that summarizes all of the company's revenues and
expenses over time in order to determine the company's profit or loss and measure its business
activity over time based on user requirements.

Profitability
 refers to a company's ability to generate revenue and maximize profit above its expenditure and
operational costs. It is measured using specific ratios such as gross profit margin, EBITDA, and
net profit margin. It aids investors in analyzing the company's performance.

Business operations
 refers to all those activities that the employees undertake within an organizational setup daily to
produce goods and services for accomplishing the company's goals like profit generation.

Expense
 is a cost incurred in completing any transaction by an organization, leading to either revenue
generation, creation of the asset, change in liability, or raising capital.

Cash Flow
 is the amount of cash or cash equivalent generated & consumed by a Company over a
given period. It proves to be a prerequisite for an alyzing the business’s strength,
 profitability, & scope for betterment.
Financial Controller
One who focuses on the accounting and budgeting aspect of the corporation; he is responsible
for the custody of financial records, preparation of te financial statements , and interpretation of financial
data. Moreover, he is responsible for the management of the budget for the efficient use of funds.